Saturday, October 16, 2010

The Coalition Considered

The Conservative-Liberal Democrat Coalition So Far

If Gordon Brown's fate has been to resemble not just one but several Shakespearean tragic heroes – cursed in his relationship with Tony Blair by a jealousy worthy of Othello, racked in the first months of his premiership by the indecision of Hamlet – then today he was Macbeth, seemingly playing out his final act. Like the embattled Scottish king holed up in his castle, watching Birnam Wood march on Dunsinane, Brown sat in No 10 knowing that, a few yards away, enemy forces were gathered, preparing to combine and seize his crown. Jonathan Freedland Observer, 9th May, 2010

Party Outcomes:
During Friday 7th May, the exhausted principal players in the election drama must have surveyed their respective positions with an admixture of feelings. All must have been disappointed, though Labour must have felt a combination of emotions. Since mid 2009 most Labour people, apart from the congenitally naive or optimistic, had expected the coming election to end in defeat. Pessimistic supporters feared a wipe-out: Labour perhaps destroyed for a generation. To return 260 seats was a substantial reassurance that the party was still in business.

The Conservatives, conversely, had long expected to cruise grandly into office, with a tidy majority. To end up in a hung parliament therefore appeared a disaster to some, a condemnation of Cameron and Osborne’s campaign strategy to others. The decision to allow televised debates when well ahead in the polls was especially the object of derision by some disaffected Conservatives. Most of them tended to be of the more traditional variety who thought Cameron’s ‘Big Society’ theme had sounded impractical and was impossible to sell on the doorstep.
But maybe it was the Liberal Democrats who were most keenly disappointed. After steady but unspectacular progress after 1992, the party had played very much a peripheral role in British politics, seeking hard to make an impact and leaning mostly towards support for Labour. Their expectations however had been electrified by the televised debates. From being a 20 per cent polling element in a ‘two and half party system’, they suddenly were an equal part of a three-way contest. Of course the voting system would not deliver them power unless they won over 40 per cent of the vote- almost unthinkable- but a 30 plus share would have given them a slew of more seats and a more powerful moral case to demand crucial voting reform. The end result however revealed that ‘Cleggmania’ had delivered virtually nothing: only one percent more of the vote than in 2005 and several seats lost besides. It was ‘so unfair and undemocratic’ many party members must have raged. But the arithmetic of the election had created a number of intriguing possibilities.

Constitutional rules:

In the event of a ‘hung’ parliament, where no party has an overall majority, the rules drawn up, based to some extent on the last time this occurred back in February 1974, lay down that the prime minister remains in office while he seeks to form a government which can command the House of Commons. In practice this means the PM tries to do a deal with another party which will facilitate a majority in the House. In 1974 Edward Heath, while having polled the more votes but was four seats short of Labour’s total of seats, tried to persuade Jeremy Thorpe’s Liberals to add their weight. Thorpe was interested but when his party insisted on voting reform as a condition, Heath backed off and Wilson took over at the head of a minority administration. Gordon Brown, therefore, accused of ‘squatting’ in Number 10 by The Sun was in fact performing his proper role to the letter. But, as he pondered his quandary, the numbers did not look promising for Brown.

The Post Election Arithmetic

The figures ended up as: Conservatives, 307; Labour, 258; Lib Dems 57; and Others, 28 (Plaid Cymru- 3, SNP 6, Greens 1, DUP, 8; Sinn Fein 5 SDLP, 5 Alliance 1). This meant that, with no overall majority available to any party two main options offered themselves: an agreement from a pact not to vote down major bills ranging to full coalition; or a minority administration in which the Conservatives, as the largest party, sought to pass their major measures, while daring the other parties to precipitate a second election in which they might be punished by the voters for bringing down the government. This feat had been achieved by Wilson in 1974 when his minority government had held on until the autumn when a second election delivered him a small majority of six.

Coalition Options

Conservative-Liberal Democrat:

This one was easily envisaged as both sets of MPs added up to a comfortable 364, easily able to survive all but the most massive backbench revolts. On the plus side: Clegg and Cameron, both public school and Oxbridge, seemed to get on well personally; both believed in robust approaches to dealing with the deficit; and both shared antipathy to Labour’s record on human rights. Against it however was a formidable list of disadvantages: Lib Dem and Conservative activists, whilst they cooperated on some councils, were frequently at daggers drawn over bitterly disputed local issues; most of the former were naturally closer ideologically to Labour; and many Lib Dem MPs had only been elected through persuading Labour voters to vote for them in order to keep Conservatives out, not put them in.

Moreover, Lib Dems feared a coalition might absorb their smaller party via a new realignment of centre left and centre-right- as had happened to the ‘National Liberals in 1931. In addition, the Conservatives were mostly opposed to the EU while Lib Dems were essentially committed to it. But the crucial bone of party contention was reform of the voting system. Once again the ‘third party’ had done badly, garnering nearly a quarter of the votes yet less than 10% of the seats. Lib Dems were desperate to achieve a more proportional system of voting while the Conservatives, aware that some 60 per cent of voters were left of centre feared such a system would lock them out of power possibly indefinitely.

Labour-Liberal Democrat:

The above realignment possibility made it very dangerous for Labour to sit back and watch it happen, with the chance it might become permanent; especially as Blair and Ashdown had both wanted such a ‘progressive alliance’ in 1997 but had been vetoed by senior figures in Labour’s Cabinet. At the end of election night, thirteen years on, something similar was to happen: a number of Labour Cabinet ministers, like Mandelson, Hain and Johnson, were openly suggesting a deal could be done on voting reform. The Lib Dems knew Labour was more sympathetic but were wary of a number of factors: Clegg had declared he did not think he could work with Labour as long as Brown was their leader; a number of Labour’s influential figures like Ed Balls, were not happy about voting reform (Brown, in addition, was believed to have been the main opponent back in 1997); and both parties disagreed on things like ID cards. But the biggest disadvantage lay in the arithmetic.

To assemble a majority Labour would need to construct a ‘rainbow’ coalition comprising themselves, the Lib Dems, plus the nationalists and the Green to achieve anything like a very slim and probably unworkable majority. The DUP might have been persuaded but their natural allies lay in the blue not red corner. Hard-headed realists on both sides doubted if such a coalition could be sustained for long. The SNP would be likely to demand a high price and any major reform of the voting system might have led to revolts in the Labour ranks. Finally, a referendum cobbled together by such an assorted collection of forces might have been perceived as opportunistic and voted down.

The End Game

The day after a desperately close fought election campaign must have left Nick Clegg exhausted. And he must have been hugely disappointed when viewing the wreckage of his hopes for a massive increase in seats turned into a net loss of five. But, so baffling and confusing had the whole process been, he suddenly found himself the much courted centre of a bidding war. Gordon Brown, still prime minister in Downing St remember, announced he would offer a referendum on the Alternative Vote system and Cabinet seats to Clegg’s party. He said he was prepared to talk to the leaders of ‘all parties’ and provide civil servant support for any negotiations.

Cameron countered by announcing a ‘big, open, comprehensive offer’ to the Liberal Democrats, recognising the differences but emphasising the common ground plus an ‘all party inquiry into electoral reform’. Clegg had said before the election that if he held the balance of power after it, he would talk to the party with the biggest mandate. Clearly the Conservatives were this party and negotiations ensued with William Hague spokesman on the Conservatives side. The media interest was intense with 24 hour news channels receiving constant attention. Rumours abounded that the EU and voting reform were proving to be sticking points but Hague and other Tory voices spoke of great good will and a substantial meeting of minds.

The next day the rightwing press were aghast to hear that Clegg had been talking secretly to Labour on Sunday. This was followed by Brown’s final attempt to keep Cameron out of his home for the past three years: he announced his resignation as Labour leader, offering to step down after a period of five months once a new Labour leader had been elected by the party. It was rumoured senior figures had urged Brown to stand down with dignity having effectively lost the election. Clegg thereupon announced he would enter into negotiations with Labour, while the country waited on tenterhooks. The day before the Observer had followed the likes of Polly Toynbee in Saturday’s Guardian in urging the negotiation of a ‘rainbow coalition’. ‘To Seize this Historic Moment, the Lib Dems Must Turn to Labour’ cried the Sunday’s editorial, backed up by columnists Will Hutton and Nick Cohen.

Labour’s resolve soon broke down however, with both sides blaming the other of not really wanting to come together and an extraordinary series of attacks on the proposed deal by a number of senior Labour figures including former Home Secretary John Reid, Lord Falconer, Andy Burnham Dianne Abott and several others. Their objections ranged from an opposition to changing the voting system to a strong sense that a ‘coalition of the losers’ would be unstable, undemocratic, short-lived and against the party’s long term interests. Clegg and his colleagues fled to the open arms of his first suitor and a coalition agreement was soon announced.

Perhaps stung by the thought Labour might steal capture the prize, Cameron upped his offer on voting reform to a promise of a referendum on the AV system. Shortly afterwards a new coalition Conservative-Liberal Democrat government was announced. Gordon Brown came out of 10 Downing St to resign with dignity and walked off with his wife and family to return to Scotland before beginning a new life, presumably not so focused on politics. David Cameron followed Brown to the palace to ‘kiss hands’ and become Britain’s 52nd prime minister. On Wednesday 12th May Cameron and Clegg appeared at a joint press conference in the garden of Number 10 Downing St, displaying an almost indecent degree of enthusiasm for each other and the new coalition.

Progress of the Coalition:

By August the coalition’s position was not looking too bad.

One thing one can say about the Coalition: its PR has been good. Anyway, The Economist's verdict, 12th August 2010, of the government's first 100 days could scarcely be improved upon; indeed a reforming incoming administration in 1997 would have been delighted with such an accolade. It's obvious the journal does not regard as the enforced imminent assault upon the city walls of Labour's public expenditure an altogether unalloyed disaster. Under Gordon Brown the UK became the Napoleonic home of dirigisme. A chart shows its spending by central government at 70% of all government spending as second only to New Zealand and above Germany (20%) and France(35%).

Labour ran a deficit even during the boom years, and stuck to its expansive three-year spending plans after recession hit. Fiscal stimulus on top of this took the deficit to a record high of 11% of GDP in 2009-10; the IMF forecast in May that it would be the biggest this year among G20 economies. Whoever won the election would sooner or later have to slash the deficit.

Osborne aims to pay off the deficit by 2014-5, less intense than some EU countries, like Ireland or Greece, but a big ask by any standards. But the journal praised the radical energy of both parties in their desire to shrink the state: 'Decentralisation has now found a home'. Education, the police and healthcare face major restructurings to make them more accountable to their local communities. Whilst aware of the dangers of precipitating the collapse of a fragile recovery, The Economist, offers a warm round of applause:

Yet with all these caveats, the new government’s vision of a looser state, and its determination to reform virtually all the public services at once, is boldly outlined. Add in the even more daring plan to cut the fiscal deficit, and Britain is in for a breathless and convulsive few years. Now and then, British elections are epochal, setting the tone for other countries, too. One such took place in 1945, when the modern welfare state got going. Another, in 1979, loosed Margaret Thatcher on a waiting world. By producing a ruling coalition that is as radical in redefining government as it is in cutting it, the election of 2010 may prove another turning point.

Policy areas:

Banking and Business-Lib Dems wanted to split retail from investment banks but Tories sceptical of this move. Result has been a commission to examine options; banks are still not lending enough. Cable is willing to fully privatise post office.

Deficit Reduction: Conservative plans dominate though Lib Dems increase of tax free allowance accepted. Otherwise latter have abandoned earlier manifesto position of not cutting too deep too fast. Eradication of the ‘structural(as opposed to ‘cyclical’) deficit’ in four years is something LDs still feel nervous about. The CSR 20th October will see LD Danny Alexander’s proposals for wholesale spending reductions. The big risk is that such cuts will slow the economy and expert opinion is still strongly divided on this point. The June Budget was criticised by the IFS for being ‘Regressive’ while the coalition claimed it was ‘fair’.

Political Reform: DPM Clegg is in charge of this, the key measure being the referendum on AV scheduled, according to the bill for next May together with equalisation of constituency boundary sizes (LDs not happy about ‘mere’ AV but Tories to campaign against it-Labour unease about it too). In addition there are: fixed term parliaments bill and an elected House of Lords bill (by end of year); plus one or two other items.

Education: Michael Gove is making the running here with his plans for more academies and to allow groups to set up ‘free’ schools. However, in both cases the number of serious take-ups has been very disappointing. LDs think along similar lines and both agree on ‘pupil premiums’, a scheme to give additional funds to schools taking on disadvantaged pupils so that they can be supported additionally. However, a major conflict is in the offing about university tuition fees which LDs oppose but Tories want to allow to rise much further. The recent Browne report supports this emphatically- average rises in tuition fees should rise to £6K- and Cable, a little shamefacedly, said he agreed w2ith the main recommendations.

Foreign Policy: LDs less keen on Afghanistan war than Tories but are ‘critical supporters’ of it. Both support Obama’s ‘surge’ and promise to withdraw troops by 2012. Cameron also wants to withdraw troops by time of next election. Obama welcomed him warmly when he visited. The Coalition is to inquire whether UK allowed torture to be used on suspects.

Defence: Trident replacement is a big issue with Tories in favour, despite £20bn cost, but LDs have won right for alternatives to be considered. It is likely replacement will be delayed until deficit has been removed. Service chiefs fighting to minimise cuts and Liam Fox not happy about imminent defence review. Simon Jenkins has called for the total abandonment of defence budget and dismissed it as ‘posturing’.

Europe: LDs launched biting attacks on Tories before election on their leaving mainstream EU grouping in parliament for a rightwing one allegedly racist and homophobic. Tory right acutely sensitive on this issue so it is potentially very divisive. Tories abandoned any attempt to rewrite EU treaties, as their rightwing wishes, as part of the coalition agreement. Cameron has made it clear he wishes to cooperate with EU partners and, while it has pleased LDs and EU partners, it has infuriated right-wingers.

Welfare: earnings link restored for pensioners as LDs wanted but public sector pensions being closely scrutinised for savings and affordability. Universal benefits have already been eroded by withdrawal of child benefit for higher rate tax payers- a policy which has won public support but enraged Tory supporters. IDS wants to introduce a new credit system which will not penalise those on benefit who return to work. LDs keen to retain Sure-start. Incapacity benefit to be made accessible only via a more stringent.

Home Affairs and Civil Liberties: LDs claim 14 of the policies in this section of the coalition agreement, many of which have been ‘actioned’. Tories have won annual immigration cap for non EU workers though Cable has objected to this. ID cards scrapped to LDs delight. Ken Clarke seems liberal on sentences and wants more, stiffer community ones and less shorter prison ones.

NHS: this has been surrendered by LDs to Tories who have introduced a big reorganisation, whereby commissioning of health services will be taken from primary health care trusts and devolved to committees of GPs. Many doubt GPs will be able to administer such a big task and that private companies might have to be called in.

Future Prospects of Coalition

LDs: Several commentators have predicted doom for the LDs. Simon Jenkins is by no means a leftwinger, despite his weekly Guardian slot, but had nothing but woe to predict for Nick Clegg(17/9/10). He starts off, amusingly, by describing Clegg as being 'in love' with Cameron:

You scurry early to the office, practising the phrase that will please him, the gesture he will notice. When you first see him in the corridor … you can't help it. The knees go. He is adorable

Unfortunately there is an angry family at home waiting to call you to account for your philandering behaviour. Jenkins praises the coalition as a 'coup' by Cameron 'worthy of Walpole': inventing a majority via a party which would die in consequence. The key question is:

'How can the Lib Dems fight the Tories at the next election when they will be defending a joint record?

The question is rhetorical of course. Clegg will have to forestall this fear at his conference... but how? Merger of the two parties possibly looms as lip-smackingly anticipated by some Tories. Jenkins suggests the coalition was a step too far. He should have agreed to stay indpendent and support what measures his party thought fit; that way he would have kept the party's integrity pure. Instead, he chose the big offfice, the car, the red boxes: the intoxication of power. He'd better enjoy it as it won't last for ever; as Jenkins grimly notes:
As leader of the Liberal Democrats, he has booked a ticket to oblivion.

Jenkins is a little too hard on the LDs maybe. In May 2010 the country faced an economic crisis, made worse by the euro crisis climaxing in Greece. The election was inconclusive but the chance to form a government lay with the LDs. If they had shirked it they would have lost credibility, they feared and argued they had a duty to step up to the plate. Maybe they will pay a heavy price but according to this view they had no choice, even to commit ‘suicide’. LDs seem happy to be in government at their Liverpool conference and they will have to lose much more support than they have so far for oblivion to beckon.

Tories: As for Cameron and the Conservatives, the future is perhaps a little less unsure. It is all dependent on two hugely important factors. First is public reaction to the CSR in a week’s time. Everyone knows it’s coming yet until the cuts bite everyone hopes it’s someone else who’ll take the hit. There has been an odd kind of ‘phoney war’ since the emergency budget 22nd June but that will soon end. The Conservatives stand at 38 in the polls, Labour at 34% and LDs at 18 but this could change rapidly. Given the shrill reaction within Tory ranks to the withdrawal of child benefit for upper rate tax payers, the reaction could be stunningly negative. Athens saw violent street demonstrations and such things might be mirrored on our streets, though Ireland has survived worse without such a dislocation.

Second, it depends on the economy. So far the recovery is fragile and some authorities have reckoned the chance of renewed recession is high. Keynesian economists, like Nobel Laureate Paul Krugman, have wondered at UK’s cavalier extraction of demand through impending expenditure cuts. Labour suggested a less drastic route to cut the deficit at about half the rate favoured by Osborne. If public opinion fastens onto the idea that the cuts were not necessary and could have been avoided, the coalition could very soon be ‘toast’. The figure below shows UK debt as substantial but not as large as some other countries.




Cameron as Prime Minister:
Even his mortal enemies would have to admit Cameron has shaped up very well to the job of being PM. Clearly his Eton background- born to rule and all that- has stood him in excellent stead. But his success has not been without rumbles in his own party, unhappy that he muddied campaign waters with his vague Big Society theme and worried he seems too liberal and too pro his coalition partners:

The right’s grievances with David Cameron are not only about policy. They have long regarded the prime minister’s leadership style as aloof and cliquey, and have neither forgotten nor forgiven his failure to win a general election they believed was eminently winnable. He aggravated this anger by retaining almost all the advisers responsible for the election campaign, while asking some Tory frontbenchers to make way for Lib Dems in the cabinet. (Economist 9/10/10).

At the party conference Cameron was keen to invoke a national, almost wartime spirit, reminiscent of the last time there was a coalition. The attempt is to place Cameron above party as a national figure. But over-personalising has dangers if the key person loses popularity- remember Blair- so Tories must be careful.

One final point needs to be made about the Conservative led coalition: its tone is nothing like earlier Tory governments. There is no hectoring shrillness, and, more significantly, no plonking, patronising upper-middle class voices, characterised, memorably by Simon Head (Guardian 2/10/10) as ‘the sneer of cold command’.

Bill Jones 14th October 2010

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